Insights

Reporting serious incidents - Consultation on revised guidance

It is clear from their Guidance that the Commission views the reporting of serious incidents as one of their key monitoring tools. They indicate that “any serious incident that has resulted or could result in a significant loss of funds or a significant risk to a charity’s property, work, beneficiaries or reputation should be reported to us immediately, not just on completion of the Annual Return.”

Nonetheless, the Trustees of many charities are still unaware of what constitutes a ‘serious incident’ for these purposes and of the need to report such incidents to the Commission. The failure to report an incident can result in adverse consequences for the charity; the Commission has indicated that if Trustees fail to report a serious incident that subsequently comes to light, the Commission “may consider this to be mismanagement and take regulatory action, particularly if further abuse or damage has arisen following the initial incident.”

In a press release issued in August 2016 regarding the opening of a statutory inquiry into Gilbert Deya Ministries, the Commission referred specifically to the failure of the Trustees to report serious incidents to the Commission.

Current Guidance

The Commission’s current Guidance on ‘Reporting Serious Incidents’ highlights a number of types of incident that they would regard as ‘serious incidents’. These include: Fraud, theft or other significant financial loss, as well as suspicions, allegations and incidents of abuse or mistreatment of vulnerable beneficiaries, irrespective of when this took place. In the case of financial loss, the Guidance explains that there is no minimum amount above which a loss must be reported, but that instead Trustees need to look at the circumstances in which the loss has taken place in order to assess whether the incident should be reported to the Commission. For example, frequent small thefts can be indicative of poor financial controls within a charity, which pose a serious risk to the charity.

The Guidance sets out the information that should be included in a report, as well as how a report should be made. It can be accessed from the following link:

Consultation

The Commission is currently consulting on revised draft Guidance. They state that this seeks to clarify what should be reported and when and how a report should be made. The draft Guidance helpfully includes as an Annex an examples table, setting out examples of incidents that should be reported and incidents that do not need to be reported, broken down into types of incident including fraud, theft, safeguarding and poor governance. In the case of financial loss, it sets out a number of factors for Trustees to take into account in deciding whether or not a report should be made to the Commission.

The consultation period ends on 12 January 2017. The consultation and revised draft Guidance can be accessed from the following link:

How we can help

We have extensive experience in advising Trustees on the reporting of serious incidents and can work with Trustees in preparing the report to be submitted to the Commission. In preparing a report, it is of key importance that the Trustees show that they have identified the risks to the charity and that they are taking appropriate steps to protect the beneficiaries, assets and reputation of the charity. In our experience, if Trustees can show that they are taking appropriate steps, it is unlikely that the Commission will take any further action since the Trustees will have shown that they are properly discharging their legal duties and responsibilities as Trustees.

This article was written by Penelope Byatt. For more information please get in touch with Penelope on +44(0)1242 246311 or via Penelope.Byatt@crsblaw.com.

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